IRS Tax News

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  • 13 Jul 2020 3:46 PM | Anonymous

    WASHINGTON — On July 9, the U.S. Tax Court struck down four more abusive syndicated conservation easement transactions. The Internal Revenue Service calls on any taxpayer involved in syndicated conservation easement transactions who receives a settlement offer from the agency to accept it soon.

    These time-limited settlement offers, announced June 25, are only being made to certain taxpayers with pending docketed Tax Court cases involving this type of abusive transaction.

    These and other recent Tax Court decisions support the abusive nature of the underlying syndicated conservation easement deduction. The four most recent U.S. Tax Court decisions disallowed conservation easement deductions totaling nearly $21 million.

    “The IRS will continue to actively identify, audit and litigate these syndicated conservation easement deals as part of its vigorous and relentless effort to combat abusive transactions,” said IRS Commissioner Chuck Rettig. “These abusive transactions undermine the public's trust in private land conservation and defraud the government of revenue. We strongly recommend that participants seek the advice of competent, independent advisors. Ending these abusive schemes remains a top priority for the IRS."

    The IRS recognizes the important role of legitimate conservation easement deductions in incentivizing land preservation for future generations. However, abusive syndicated conservation easement transactions have been of concern to the IRS for several years.

    The IRS is aware that some promoters of these abusive transactions have downplayed the significance of the string of recent court decisions holding in the government’s favor, arguing that their cases are somehow different or that those decisions might be reversed on appeal. These promoters ignore common sense and argue that the real dispute is about value, neglecting to explain how the reporting of short-term appreciation, often exceeding many multiples of reality, could possibly withstand judicial scrutiny.

    “Taxpayers should ignore this nonsense, take an objective look at their cases, and cut their losses,” said IRS Chief Counsel Mike Desmond. “Abusive transactions, like settlement offers, do not get better with time, and this is a good opportunity to get out.”  

    In listed syndicated conservation easement structures, promoters syndicate ownership interests in real property through partnerships, using promotional materials to suggest that prospective investors may be entitled to a share of a conservation easement contribution deduction that equals or exceeds two and one-half times the investment amount. The promoters obtain an appraisal that greatly inflates the value of the conservation easement based on a fictional and unrealistic highest and best use of the property before it was encumbered with the easement.

    After the investors invest in the partnership, the partnership donates a conservation easement to a land trust. Investors in the partnership then claim a deduction based on an inflated value. The investors typically claim charitable contribution deductions that grossly multiply their actual investment in the transaction and defy common sense.

    For more details, see IR-2020-130.

  • 13 Jul 2020 3:45 PM | Anonymous

    WASHINGTON – Leaders from five international tax organizations are marking the two-year anniversary of the formation of the Joint Chiefs of Global Tax Enforcement (J5) this week. 

    The J5 includes the Australian Taxation Office (ATO, the Canadian Revenue Agency (CRA), the Dutch Fiscal Information and Investigation Service (FIOD), Her Majesty’s Revenue and Customs (HMRC) from the UK and the Internal Revenue Service Criminal Investigation Division (IRS-CI) from the US.

    Taking advantage of each country’s strengths, the J5’s initial focus was on enablers of tax crime, virtual currency and platforms that enable each country to share information in a more efficient manner.  Within the framework of each country’s laws, J5 countries shared information and were able to open new cases, more completely develop existing cases, and find efficiencies to reduce the time it takes to work cases. Operational results have always been the goal of the organization and they have started to materialize.

    “While operational results matter, I’ve been most excited at the other benefits that this group’s existence has provided,” said Don Fort, Chief, IRS Criminal Investigation. “In speaking with law enforcement partners domestically and abroad as well as stakeholders in various public and private tax organizations, there is real support for this organization and tangible results we have all seen due to the cooperation and global leadership of the J5.”

    During the two years since the J5’s inception, hundreds of data exchanges between J5 partner agencies have occurred with more data being exchanged in the past year than the previous 10 years combined. Each J5 country brings different strengths and skillsets to the J5 and leveraging those skills and capabilities enhance the effectiveness and success of the J5.

    Experts from the J5 countries have seen indications that tax offenders are embracing ever more complex methods to conceal their wrongdoings, creating multiple mechanisms and structures that are split across jurisdictions, taking advantage of those areas that offer secrecy and regulatory benefits. With this information, the J5 finds itself continuously adapting to the latest criminal methods and changing behaviors to prioritize the collective operational activity to tackle this dynamic threat picture. 

    Since the inception of the organization, two J5 countries have hosted events known as “Challenges” aimed at developing operational collaboration. FIOD hosted the first J5 “Challenge” in Utrecht in 2018 and brought together leading data scientists, technology experts and investigators from all J5 countries in a coordinated push to track down those who make a living out of facilitating and enabling international tax crime.  The event identified, developed, and tested tools, platforms, techniques, and methods that contribute to the mission of the J5 focusing on identifying professional enablers facilitating offshore tax fraud. The following year, the U.S. hosted a second “Challenge” in Los Angeles and brought together investigators, cryptocurrency experts and data scientists in a coordinated push to track down individuals perpetrating tax crimes around the world.

    Last week, a Romanian man was arrested in Germany and admitted to conspiring to engage in wire fraud and offering and selling unregistered securities in connection with his role in the BitClub Network, a cryptocurrency mining scheme worth at least $722 million. This plea was the first for a case under the J5 umbrella and stemmed from collaboration with the Netherlands during the “Challenge” in Los Angeles in 2019.

    “The value of the Challenges cannot be overstated,” said Fort. “When you take some of the smartest people from each organization and put them in a room for a few days, the results are truly impressive.  Each country found investigative leads and was able to further cases utilizing tools and techniques created by each country’s experts specifically for the Challenge. I see us doing more of these events in the future.” 

    Last year, the United States and the World Bank hosted cyber training in Washington, DC bringing together more than 120 international and domestic law enforcement partners from approximately 20 countries to address emerging areas associated with cybercrime, virtual currency, blockchain and the dark web. Additionally, to ensure J5 countries were using all law enforcement and legal tools available during their collaborative work, trainings were held in Sydney and the Netherlands on international elements of the UK corporate criminal offense legislation and prosecution opportunities to lawyers and public prosecutors.

    After two years of collaboration, data sharing and accelerated casework, the J5 began seeing operational results in early 2020. J5 countries participated in a globally coordinated day of action to put a stop to the suspected facilitation of offshore tax evasion. The action was part of a series of investigations in multiple countries into an international financial institution located in Central America, whose products and services are believed to be facilitating money laundering and tax evasion for customers across the globe. Evidence, intelligence and information collection activities such as search warrants, interviews and subpoenas were undertaken in each country and significant information was obtained and shared as a result. That investigation is ongoing.

    “To see each country participate in a coordinated enforcement action all over the world at the same time with the same goal in mind was a real watershed moment for this organization,” said Fort.  “And that was just the beginning.  With dozens of cases in our collective pipelines, I’m excited to see what the next year brings in terms of operational results.”

    In addition to the group’s work with enablers and virtual currency, the J5 also focused on platforms that enable each country to share information in a more organized manner.  FCInet is one such platform that each country has invested in to further that goal.  FCInet is a decentralized virtual computer network that enables agencies to compare, analyse and exchange data anonymously. It helps users to obtain the right information in real-time and enables agencies from different jurisdictions to work together while respecting each other’s local autonomy.  Organizations can jointly connect information, without needing to surrender data or control to a central database. FCInet doesn’t collect data, rather it connects data.

    The J5 was formed in 2018 after a call to arms from the OECD Taskforce on Tax Crime and has been working together to gather information, share intelligence and conduct coordinated operations, making significant progress in each country’s fight against transnational tax crime.

    For more information about J5, please visit www.irs.gov/J5.

  • 13 Jul 2020 11:48 AM | Anonymous

    WASHINGTON — The Internal Revenue Service today reminded taxpayers with a filing requirement to file an accurate tax return on time even if a balance due can’t be paid in full. The deadline to submit 2019 tax returns is July 15, 2020, for most people. Members of the military serving overseas may have more time.

    File electronically to avoid most common errors
    Filing electronically and choosing direct deposit remains the fastest and safest way to file an accurate income tax return and receive a refund. Filing electronically reduces tax return errors as the tax software does the calculations, flags common errors and prompts taxpayers for missing information.

    An inaccurate tax return can delay a refund.

    Some common errors to avoid include:

    • Missing or inaccurate Social Security numbers. Enter each name and SSN exactly as printed on the Social Security card.
    • Incorrect filing status. The Interactive Tax Assistant on IRS.gov can help taxpayers choose the correct status. Tax software also helps prevent these mistakes.
    • Math errors. Tax preparation software does all the math automatically. Math errors are common on paper returns.
    • Figuring credits or deductions incorrectly. Taxpayers should follow the instructions carefully, and double check the information they enter when filing electronically. The IRS Interactive Tax Assistant can help determine if a taxpayer is eligible for certain tax credits.
    • Unsigned returns. Both spouses must sign if filing jointly. Taxpayers can avoid this error by filing their return electronically and digitally signing it. Exceptions may apply for military families if a spouse is serving overseas.
    • Filing with an expired individual taxpayer identification number.

    In most cases, tax software helps to reduce or eliminate these. Find complete details on all the benefits of filing electronically, including IRS Free File, commercial tax prep software or an authorized e-File provider from the “File” page on IRS.gov.

    Checking on refunds
    The IRS is processing electronic and paper tax returns and issuing refunds. The IRS normally issues most refunds in less than 21 days. Taxpayers who mailed a tax return will experience a longer wait time. There is no need to mail a second tax return or call the IRS. “Where’s My Refund?”  on IRS.gov is the most convenient way to check the status of a refund. It has a tracker that displays progress through three phases: (1) Return Received; (2) Refund Approved; and (3) Refund Sent.

    All that is needed to use “Where’s My Refund?” is the taxpayer’s Social Security number, tax filing status (such as single, married, head of household) and exact amount of the tax refund claimed on the 2019 tax return. It is updated no more than once every 24 hours, usually overnight, so there’s no need to check the status more often.

    Taxpayers should file now, schedule full or partial tax payments up to the July 15 due date
    Taxpayers can pay online, by phone or with their mobile device and the IRS2Go app. When paying federal taxes electronically taxpayers should remember:

    • Electronic payment options are the optimal way to make a tax payment.
    • They can pay when they file electronically using tax software online. If using a tax preparer, taxpayers should ask the preparer to make the tax payment through an electronic funds withdrawal from a bank account.
    • IRS Direct Pay allows taxpayers to pay online directly from a checking or savings account for free.
    • Taxpayers can choose to pay with a credit card, debit card or digital wallet option through a payment processor. The processor may charge a fee. No fees go to the IRS.
    • The IRS2Go app provides the mobile-friendly payment options, including Direct Pay and payment processor payments on mobile devices.
    • Taxpayers may also enroll in the Electronic Federal Tax Payment System and have a choice of paying online or by phone by using the EFTPS Voice Response System.

    Can’t pay a tax bill?
    Everyone should file their 2019 tax return by the July 15 tax filing deadline regardless of whether or not they can pay in full. Taxpayers who owe and can’t pay all taxes due have options including: 

    • Online Payment Agreement — Most individual taxpayers and many business taxpayers may qualify to use Online Payment Agreement to set up a payment plan. Taxpayers can setup a plan on IRS.gov/paymentplan in a matter of minutes. Setup fees may apply for some types of plans.
    • Delaying Collection — If the IRS determines a taxpayer is unable to pay, it may delay collection until the taxpayer's financial condition improves. In light of COVID-19, IRS postponed many compliance efforts until July 15 or later under the People First Initiative.
    • Offer in Compromise (OIC) — Taxpayers who qualify enter into an agreement with the IRS that settles their tax liability for less than the full amount owed.

    Find more information on when, how and where to file see Tax Information for Individuals.

    Need an extension of time to file a 2019 tax return?
    Those who need more time to prepare their 2019 federal tax return can apply for an extension of time to file.  An extension of time to file does not grant an extension of time to pay taxes owed.  File an extension request, estimate and pay any owed taxes by the July 15 deadline to avoid possible penalties.

    Individual tax filers, regardless of income, can use Free File to electronically request an automatic tax-filing extension. Filing this form gives the taxpayer until Oct. 15 to file a return. To get the extension, the taxpayer must estimate their tax liability on this form and pay any amount due

    Taxpayers can also get an extension by paying all or part of their estimated income tax due and indicate that the payment is for an extension using Direct Pay, the Electronic Federal Tax Payment System (EFTPS), or a credit or debit card. This way they won’t have to file a separate extension form and will receive a confirmation number for their records.

    Check withholding
    The IRS encourages taxpayers to do a Paycheck Checkup as soon as possible to avoid having too much or too little tax withheld this year. Too much normally results in a refund while too little lends itself to taxes owed next year. Taxpayers should check their withholding each year and when life changes occur, such as marriage, childbirth, adoption or buying a home.

    The IRS Tax Withholding Estimator is an excellent tool to help people plan and make any needed tax withholding adjustments. 

    Taxpayers can find answers to questions, forms and instructions and easy-to-use tools online at IRS.gov. They can use these resources to get help when it’s needed at home, at work or on the go.

    More resources:

  • 10 Jul 2020 12:16 PM | Anonymous

    WASHINGTON — The Internal Revenue Service is reminding taxpayers that using the IRS Tax Withholding Estimator to do a Paycheck Checkup can help them have the right amount of tax withheld and avoid surprises when filing next year.

    Because income taxes are pay-as-you-go, taxpayers are required by law to pay most of their tax as income is received. There are two ways to do this:

    • Through withholding from paychecks, pension payments, Social Security benefits or certain other government payments.
    • Making quarterly estimated tax payments throughout the year for income not subject to withholding.

    Income tax withholding is generally based on the worker’s expected filing status and standard deduction. The Tax Withholding Estimator is a tool on IRS.gov designed to help taxpayers determine how to have the right amount of tax withheld from their paychecks. It offers workers, retirees, self-employed individuals and other taxpayers a clear, step-by-step method to help determine if there is a need to adjust their withholding and submit a new Form W-4 to their employer. The latest update of the Tax Withholding Estimator provides detailed explanations to withholding recommendations on the Results Page.

    When to do a Paycheck Check-up

    Taxpayers should check their withholding annually and when life changes occur, such as marriage, childbirth, adoption and buying a home. The IRS recommends anyone who changed their withholding this year or received a tax bill after they filed their 2019 return should do a Paycheck Checkup.

    Estimated taxes

    Taxpayers with a substantial portion of their income not subject to withholding − the self-employed, investors, retirees, those with interest, dividends, capital gains, alimony and rental income − often need to pay quarterly installments of estimated tax.

    The IRS reminds taxpayers that various financial transactions, especially late in the year, can often have an unexpected tax impact. Examples include year-end and holiday bonuses, stock dividends, capital gain distributions from mutual funds and stocks, bonds, virtual currency, real estate or other property sold at a profit.

    Form 1040-ES, Estimated Tax for Individuals, includes instructions to help taxpayers figure their estimated taxes. They can also visit IRS.gov/payments to pay electronically. IRS offers two free electronic payment options where taxpayers can schedule their estimated federal tax payments up to 30 days in advance with IRS Direct Pay or up to 365 days in advance with the Electronic Federal Tax Payment System (EFTPS).

    For information see:
    Tax Withholding Estimator FAQs
    FAQs on the 2020 Form W-4
  • 10 Jul 2020 12:01 PM | Anonymous

    WASHINGTON — With the July 15 tax-filing deadline − postponed from April 15 – only a few days away, the IRS is reminding taxpayers who have yet to file their tax returns that IRS.gov has tools and services to help them meet their tax obligations.

    IRS tax help is available 24 hours a day on IRS.gov. Whether filing a tax return, requesting an extension or making a payment, the IRS website can help last-minute filers on just about everything related to taxes. Taxpayers can also use the Interactive Tax Assistant tool to answer many tax questions they may encounter.

    The IRS reminds taxpayers they have a range of expert help available through a qualified tax professional, including certified public accountants, enrolled agents and attorneys. The IRS encourages people who need the help of a tax professional to visit a special page on IRS.gov.

    Prepare and file taxes for free

    Taxpayers also have several options for preparing and filing their tax returns:

    • Taxpayers with income of $69,000 or less can use IRS Free File to find free tax preparation software.
    • Taxpayers with incomes above $66,000 and comfortable doing their own taxes can use Free File Fillable Forms for free.
    • Use commercial tax prep software to prepare and file taxes through IRS approved electronic channels.
    • Use an authorized e-File provider accepted by our electronic filing program. Authorized IRS e-file providers are qualified to prepare, transmit and electronically file returns.
    • Members of the military and qualified veterans can use MilTax, a free online tax service provided by the Department of Defense and Military OneSource.

    Receive refunds faster

    The fastest way to receive a refund is to file electronically and use direct deposit. Taxpayers who file electronically and request direct deposit for their refund need to know that:

    • Nine out of 10 tax refunds are issued in 21 days or less.
    • The best way to check on a refund is the “Where’s My Refund?” tool.
    • The “Where’s My Refund?” tool available on IRS.gov and the IRS2Go mobile app.
    • “Where’s My Refund?” is updated once a day, usually overnight.
    •  Refunds can be divided into up to three accounts.

    Delays for paper tax returns

    The IRS is experiencing delays in processing paper tax returns due to limited staffing. This is another reason that taxpayers should choose to electronically file their taxes.

    Taxpayers who filed a paper tax return and expect a refund may experience a delay beyond the normal time frame of four to six weeks from the time they mailed the return. The IRS will process paper returns in the order they are received.

    Taxpayers should not file the same return again or call the IRS if they filed a paper tax return and are experiencing a refund delay.

    Get more time to file

    Individual taxpayers who need additional time to file beyond the July 15 deadline can request a filing extension to Oct. 15 in one of two ways:

    Special rules may apply for some military personnel if they are:

    Pay with ease

    Taxpayers can file now and schedule their federal tax payments up to the July 15 due date. They can pay online, by phone or with their mobile device using the IRS2Go app. When paying federal taxes electronically taxpayers should remember:

    • Electronic payment options are the optimal way to make a tax payment.
    • They can pay when they file electronically using tax software online. If using a tax preparer, taxpayers should ask the preparer to make the tax payment through an electronic funds withdrawal from a bank account.
    • IRS Direct Pay allows taxpayers to pay online directly from a checking or savings account for free, and to schedule payments up to 365 days in advance.
    • Taxpayers can choose to pay with a credit card, debit card or digital wallet option through a payment processor. The payment processor adds a fee; no fees go to the IRS.
    • The IRS2Go app provides the mobile-friendly payment options, including Direct Pay and through payment providers.
    • Taxpayers may also enroll in the Electronic Federal Tax Payment System and have a choice of paying online or by phone by using the EFTPS Voice Response System.

    Get more time to pay

    Qualified taxpayers can choose to pay any taxes owed over time through an installment agreement. An online payment plan can be set up in a matter of minutes. Interest and late-payment penalties continue to accrue on any unpaid taxes after July 15.

    Payment options include:

    However, a taxpayer’s specific tax situation will determine which payment options are available.

    The IRS has more information for taxpayers who owe taxes, but cannot afford to pay the full amount.

    Get the full picture

    Taxpayers can go to IRS.gov/account to securely access information about their federal tax account. They can view the amount they owe, access their tax records online, review their payment history and view key tax return information for the most recent tax return as originally filed.

  • 09 Jul 2020 3:20 PM | Anonymous

    Taxpayers have a variety of options to consider when paying federal taxes. This year, in response to the COVID-19 pandemic, the filing deadline and tax payment due date was postponed from April 15 to July 15, 2020.

    A list of forms due July 15 is on the Coronavirus Tax Relief: Filing and Payment Deadlines page. Electronic payment options are the optimal way to make a tax payment. All payment options are available at IRS.gov/payments.

    The IRS reminds taxpayers filing Form 1040 series returns that they must file Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, by July 15 to obtain the automatic extension to Oct. 15. The extension provides additional time to file the tax return – it is not an extension to pay any taxes due.

    Those who owe a 2019 income tax liability, as well as estimated tax for 2020, must make two separate payments on or by July 15, 2020.One for their 2019 income tax liability and one for their 2020 estimated tax payments. The two estimated tax payments can be combined into a single payment.

    Automatic extension of time to file

    Taxpayers who need more time to prepare and file their federal tax return can apply for an extension of time to file until Oct. 15. To get an extension, taxpayers must estimate their tax liability on the extension form and pay any amount due.

    Individual taxpayers have several easy ways to file Form 4868 by the July 15 deadline. Tax software providers have an electronic version available. In addition, all taxpayers, regardless of income, can use IRS Free File to electronically request an automatic tax-filing extension.

    State deadlines may differ

    The IRS also reminds taxpayers to check their state filing and payment deadlines, which may differ from the federal July 15 deadline. A list of state tax division websites is available through the Federation of Tax Administrators.

    Paying electronically:

    • Individuals – Taxpayers can use Direct Pay for two payments each day. Direct Pay allows taxpayers to pay online directly from a checking or savings account for free, and to schedule payments up to 365 days in advance. They will receive an email confirmation of their payments.
    • Businesses – For businesses or those making large payments, the best payment option is the Electronic Federal Tax Payment System, which allows up to five payments per day. Enrollment is required. Taxpayers can schedule payments up to 365 days in advance and opt in to receive email notifications about their payments.

    Additional electronic payment options:

    • Taxpayers can pay when they file electronically using tax software online. If using a tax preparer, ask the preparer to make the tax payment through an electronic funds withdrawal from a bank account.
    • Taxpayers can choose to pay with a credit card, debit card or digital wallet option through a payment processor. Processing fees apply. No part of the card service fee goes to the IRS.
    • The IRS2Go app provides mobile-friendly payment options, including Direct Pay and Payment Provider payments on mobile devices

    Paying by check, money order or cashier’s check:

    • 2019 Tax Liability – If paying a 2019 income tax liability without an accompanying 2019 tax return, taxpayers paying by check, money order or cashier’s check should include Form 1040-V, Payment Voucher with the payment. Mail the payment to the correct address by state or by form. Do not send cash through the mail. Indicate on the check memo line that this is a 2019 income tax payment.
    • For those paying when filing their 2019 income tax return, do not staple or paperclip the payment to the return. For more information, go to Pay by Check or Money Order on IRS.gov.
    • 2020 Estimated Tax Payments - Taxpayers making their 2020 estimated tax payment by check, money order or cashier’s check should include the appropriate Form 1040 ES payment voucher. Indicate on the check memo line that this is a 2020 estimated tax payment.

    Paying by cash:

    • Individuals and businesses, preferring to pay in cash, can do so at a participating retail store. Select the cash option in the “Other Ways You Can Pay” section and follow the instructions. There is a $1,000 payment limit per day and a $3.99 fee per payment.

    Payment options for those who cannot pay in full:

    For taxpayers who cannot pay in full, the IRS encourages them to pay what they can and consider a variety of payment options available for the remaining balance. Act as quickly as possible. Tax bills accumulate more interest and fees the longer they remain unpaid.

    Most taxpayers have the following payment options:

    • Online Payment Agreement — These are available for individuals who owe $50,000 or less in combined income tax, penalties and interest and businesses that owe $25,000 or less in combined payroll tax, penalties and interest and have filed all tax returns. Most taxpayers qualify for this option, and an Online Payment Agreement can usually be set up in a matter of minutes on IRS.gov/OPA. Online Payment Agreements are available Monday – Friday, 6 a.m. to 12:30 a.m.; Saturday, 6 a.m. to 10 p.m.; Sunday, 6 p.m. to midnight. All times are Eastern time. Certain fees may apply.
    • Installment Agreement — Taxpayers who do not qualify to use the online payment agreement option, or choose not to use it, can also apply for a payment plan by phone, or by mail by submitting Form 9465, Installment Agreement Request. Installment agreements paid by direct deposit from a bank account or a payroll deduction will help taxpayers avoid default on their agreements. It also reduces the burden of mailing payments and saves postage costs. Certain fees may apply.
    • Temporarily Delaying Collection — Taxpayers can contact the IRS to request a temporary delay of the collection process. If the IRS determines a taxpayer is unable to pay, it may delay collection until the taxpayer's financial condition improves. Penalties and interest continue to accrue until the full amount is paid.
    • Offer in Compromise — Certain taxpayers qualify to settle their tax bill for less than the amount they owe by submitting an offer in compromise. To help determine eligibility, use the Offer in Compromise Pre-Qualifier tool.

    Though interest and late-payment penalties continue to accrue on any unpaid taxes after July 15, the failure to pay tax penalty rate is cut in half while an installment agreement is in effect. The usual penalty rate of 0.5% per month is reduced to 0.25%. For the calendar quarter beginning July 1, 2020, the interest rate for underpayment is 3%.

    In addition, taxpayers can consider other options for payment, including getting a loan to pay the amount due. In many cases, loan costs may be lower than the combination of interest and penalties the IRS must charge under federal law.

    Reviewing federal tax information online

    Individual taxpayers can go to IRS.gov/account to securely access information about their federal tax account. They can view the amount they owe, access their tax records online, review their payment history and view key tax return information for the most recent tax return as originally filed.

    Check tax withholding

    The IRS urges all taxpayers to check their withholding for 2020, especially those who made withholding adjustments in 2019 or had a major life change. Those most at risk of having too little tax withheld from their pay include taxpayers who itemized in the past but now take the increased standard deduction as well as two-wage-earner households, employees with non-wage sources of income, and those with complex tax situations.

    To help taxpayers allocate the appropriate withholding to their paychecks throughout the year in 2020, an updated version of the agency’s online Tax Withholding Estimator is now available on IRS.gov. It’s never too early to check withholding.

    Online tools

    The IRS urges taxpayers to take advantage of the many tools and other resources available on IRS.gov, especially with extremely limited phone services and face-to-face service due to COVID 19.

  • 09 Jul 2020 2:23 PM | Anonymous

    WASHINGTON — The Internal Revenue Service issued final regulations that provide guidance on deductions for foreign-derived intangible income (FDII) and global intangible low-taxed income allowed to domestic corporations under the Internal Revenue Code.

    These final regulations provide guidance on both the computation of the deductions available and the determination of FDII.

    In addition, the guidance provides rules for the computation of FDII in the consolidated return context.

    The guidance published today also finalizes the reporting rules requiring the filing of Form 8993, Section 250 Deduction for Foreign-Derived Intangible Income and Global Intangible Low-Taxed Income.

    For more information about this and other Tax Cuts and Jobs Act provisions, visit IRS.gov/taxreform.

  • 09 Jul 2020 11:26 AM | Anonymous

    WASHINGTON — The Internal Revenue Service today reminded people that contributions to traditional Individual Retirement Arrangements (IRAs) made by the postponed tax return due date of July 15, 2020, are deductible on a 2019 tax return.

    Taxpayers can file their 2019 tax return now and claim the deduction before the contribution is actually made. But the contribution must then be made by the July 15 due date of the return, not including extensions.

    Most taxpayers who work and are under age 70 ½ at the end of 2019 are eligible to start a traditional IRA or add money to an existing account.Taxpayers can contribute to a Roth IRA at any age. Starting with tax year 2020, taxpayers of any age – even those over 70 ½ –  can start a traditional IRA.

    Contributions to a traditional IRA are usually tax deductible and withdrawals are generally taxable. Contributions to a Roth IRA are not tax deductible, but qualified withdrawals are tax-free. In addition, low and moderate-income taxpayers who make contributions to a traditional or Roth IRA may also qualify for the Saver’s Credit.

    Eligible taxpayers can usually contribute up to $6,000 to an IRA for 2019. The limit is increased to $7,000 for taxpayers who were age 50 or older by the end of 2019. 

    Contributions to traditional IRAs are deductible up to the lesser of the contribution limit or 100% of the taxpayer’s compensation. Compensation is generally what a person earns from working.

    However, if a taxpayer is covered by a workplace retirement plan, the deduction for contributions to a traditional IRA for tax year 2019 is reduced if the taxpayer’s modified adjusted gross income (MAGI) is:

    • More than $64,000 but less than $74,000 for a single individual, head of household, or a married person filing separately who didn’t live with their spouse at any time in 2019. No deduction if $74,000 or more.
    • More than $103,000 but less than $123,000 for a married couple filing a joint return or a qualifying widow(er). No deduction if $123,000 or more.
    • More than $193,000 but less than $203,000 for a married couple filing a joint return where one spouse is covered by a retirement plan at work and the other is not. No deduction if $203,000 or more.
    • Less than $10,000 for a married individual filing separately and lived with their spouse at any time during 2019. No deduction if $10,000 or more.

    Even though contributions to Roth IRAs are not tax deductible, for tax year 2019 the maximum amount a taxpayer can contribute is reduced if their MAGI is:

    • $122,000 or more for a single individual, head of household, or a married person filing separately who didn’t live with their spouse at any time in 2019. No contribution allowed if MAGI is $137,000 or more.
    • $193,000 or more for a married couple filing jointly or a qualifying widow(er). No contribution alllowed if MAGI is $203,000 or more.
    • Less than $10,000 for a married individual filing separately and lived with their spouse at any time during 2019. No contribution if $10,000 or more.

    The Retirement Savings Contributions Credit, also known as the Saver’s Credit, is often available for IRA contributors if their adjusted gross income falls below certain levels. For 2019, taxpayers may be able to claim the credit if their MAGI was not more than:

    •  $64,000 for married filing jointly.
    •   $48,000 for head of household.
    •   $32,000 for single, married filing separately or a qualifying widow(er).

    Taxpayers should use Form 8880, Credit for Qualified Retirement Savings Contributions, to claim the Saver’s Credit. The instructions have details on how to figure the credit.

    Worksheets related to IRAs are available in the Form 1040 Instructions or in Publication 590-A, Contributions to Individual Retirement Arrangements. The deduction for IRA contributions is claimed on Form 1040, Schedule 1. Nondeductible contributions to a traditional IRA are reported on Form 8606.

    Taxpayers should also be aware that special rules allow for tax-favored withdrawals and repayments from certain retirement plans for those affected by the coronavirus or those who suffer economic loss as a result of certain major disasters. Taxpayers can find answers to questions, get forms and instructions and find easy-to-use tools online at IRS.gov.

    More resources:

  • 09 Jul 2020 11:25 AM | Anonymous

    WASHINGTON — As the July due date for filing a tax return draws closer, the Internal Revenue Service reminds taxpayers about the many resources available on IRS.gov. Whether on home computers or mobile devices, the number of taxpayers visiting IRS.gov continues to grow year after year.

    Easy-to-use tools, available 24 hours a day on the IRS website, have been used more than 1.2 billion times this year.

    IRS.gov is home to IRS Free File, "Where's My Refund?", the Tax Withholding Estimator and a host of other convenient applications. Additional help is available in Publication 17, Your Federal Income Tax, available on IRS.gov. Publication 17 is also available as an eBook.

    Taxpayers who have yet to file their tax returns should file electronically now and choose direct deposit if they’re getting a refund. Taxpayers who owe for tax year 2019 can pay anytime up to the July 15 due date.

    File electronically for free

    Taxpayers whose income was $69,000 or less last year are eligible to use the IRS Free File software to do their taxes. Also, regardless of income, any taxpayer who is comfortable preparing their own taxes can use Free File Fillable Forms. Taxpayers can use these electronic versions of IRS tax forms to complete their taxes and file them online. Free File options are available at IRS.gov/freefile.

    Get answers to tax questions

    Taxpayers can find answers to many of their questions using the Interactive Tax Assistant. It’s a tax law resource that uses a series of questions and responses to help. IRS.gov also has answers to Frequently Asked Questions on a variety of topics. The IRS website also has tax information in: Spanish (Español); Chinese (中文); Korean (한국어); Russian (Pусский); Vietnamese (Tiếng Việt); and Haitian Creole (Kreyòl ayisyen).

    "Where's My Refund?"

    Taxpayers can easily find the most up-to-date information about their tax refund using the "Where's My Refund?" tool on IRS.gov and on the IRS mobile app, IRS2Go. Within 24 hours after the IRS acknowledges receipt of an electronically filed return, taxpayers can start checking on the status of their refund.

    Schedule a payment

    Taxpayers can file now and schedule their federal tax payments up to the July 15 due date. They can pay online, by phone or with their mobile device and the IRS2Go app. When paying federal taxes electronically, taxpayers should remember:

    • Electronic payment options are the best way to make a tax payment.
    • They can pay when they e-file by using tax software online.
    • If using a tax preparer, taxpayers should ask the preparer to make the tax payment through an electronic funds withdrawal from a bank account.
    • IRS Direct Pay allows taxpayers to pay online directly from a checking or savings account for free.
    • Taxpayers can choose to pay with a credit card, debit card or digital wallet option through a payment processor. No fees go to the IRS.
    • The IRS2Go app provides mobile-friendly payment options, including Direct Pay and payment processors on mobile devices.
    • Taxpayers may also enroll in the Electronic Federal Tax Payment System and pay online or by phone.
    • They can pay with cash at a retail partner. New locations available.
    • Taxpayers can go to IRS.gov/account to securely access information about their federal tax account. They can view the amount they owe, access their tax records online, review their payment history and view key information for the most recent tax return as originally filed.

    Not required to file a tax return? Non-Filers tool available to register for Economic Impact Payments

    People who are not normally required to file a tax return and don’t plan to do so can use the Non-Filers tool to get an Economic Impact Payment. The only way they can get this payment is to register with the IRS by using this free tool. Available in both English and Spanish, the tool was developed jointly by the IRS and the Free File Alliance. The registration deadline is Oct. 15, 2020.

    More information

    IRS.gov/COVIDtaxdeadlines
    IRS.gov/payments
    IRS.gov/account
    IRS.gov/ITA
    IRS.gov/estimatedtaxes

  • 09 Jul 2020 8:10 AM | Anonymous

    Notice 2020-54 provides guidance to employers on the requirement to report the amount of qualified sick leave wages and qualified family leave wages paid to employees under the Families First Coronavirus Response.  Employers are required to report these amounts either on Form W-2, Box 14, or on a separate statement.  This required reporting provides employees who are also self-employed with information necessary for properly claiming qualified sick leave equivalent or qualified family leave equivalent credits under the Families First Act.

    Notice 2020-54 will be in IRB:  2020-31, dated July 27, 2020.

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